Chinese firms concerned about security risk abroad

China-Asean forum highlights need for companies to protect investments overseas

The sacking of a Chinese garment factory worker in Yangon in February led to the ransacking of the plant by 300 of its local employees who also held seven Chinese workers captive.

In another case, in 2015, a Yunnan timber firm signed a forestry deal with a local government of an unspecified country that led to it being caught in a conflict between the central government's military and the local army. Not only did the company suffer heavy financial losses but 153 of its workers were also arrested and charged.

These examples of security risks that Chinese companies encountered as more of them invested directly in South-east Asia were highlighted yesterday by Mr He Xifeng, director of the Council of South-east Asian Affairs at the Kunming Lawyers Association. He spoke at a session on protecting Chinese investments overseas on the second and last day of the China-Asean Entrepreneurs Forum which saw nearly 1,300 businessmen and academics from the region gather to share experiences and discuss business opportunities.

Apart from Asian countries, Chinese companies and citizens have also encountered security problems in recent years in conflict zones in Africa, such as in South Sudan and Libya, and in the Middle East, including in Iraq and Yemen, where the government had to act to evacuate Chinese nationals caught in the cross-fire.

The problems encountered by Chinese firms overseas are in part due to the lack of understanding of the need to take measures to manage security risks, said Mr Zhe Meijie, president of VSS Security Group, a security services firm. "Despite the frequency of incidents, there are those who feel fortunate to be spared and don't recognise the need to take preventive and control measures against security risks," he said.

Many Chinese state-owned enterprises and private companies taking part in the Belt and Road Initiative (BRI) tended to neglect security risk analysis even though they were diligent about financial and business risk analyses, according to Mr Joshua Kwai, group CEO of Singapore JK Consultancy Holdings. This tended to put them at a disadvantage in the security arena.

The problems encountered by Chinese firms overseas are in part due to the lack of understanding of the need to take measures to manage security risks, said Mr Zhe Meijie, president of VSS Security Group, a security services firm.

The BRI is an ambitious plan mooted by Chinese President Xi Jinping in 2013 to build infrastructure such as roads, railways and ports in developing countries that link China to Europe and Africa.

However, the situation is changing, said Mr Kwai, who gave a presentation on overseas terrorism risk management at the forum .

"They have come to the realisation that they need to do something before they go out, including making a security risk assessment (and having) an integrated security plan," he told The Sunday Times.

Mr Wang Guobao, who heads the Chinese Overseas Security Group, said that with the BRI, Chinese security companies would be playing catch up to provide security services of international standards. Apart from security issues, forum participants also discussed tourism in the digital age, revitalisation of the Chinese countryside as well as trade and investment opportunities in Laos and Myanmar.

A version of this article appeared in the print edition of The Sunday Times on December 10, 2017, with the headline 'Chinese firms concerned about security risk abroad'. Print Edition | Subscribe